The government’s sentencing memorandum for SBF is here; it is seeking a sentence of 40-50 years.
As typical for DOJ in high-profile cases, it is well-written and well-done. I’m not just saying that because it makes many of the same points I identified in my earlier writeup of SBF’s memorandum. E.g., p. 8 (“doubling down” rather than walking away from the fraud); p. 43 (“paid in full” claim is highly misleading) [page cites to numbers at bottom of page, not to PDF page #].
EA-adjacent material: There’s a snarky reference to SBF’s charitable donations “(for which he still takes credit)” (p. 2) in the intro, and the expected hammering of SBF’s memo for taking credit for attempting to take credit for donations paid with customer money (p. 95). There’s a reference to SBF’s “idiosyncratic . . . beliefs around altruism, utilitarianism, and expected value” (pp. 88-89). This leads to the one surprise theme (for me): the need to incapacitate SBF from committing additional crimes (pp. 87, 90). Per the feds, “the defendant believed and appears still to believe that it is rational and necessary for him to take great risks including imposing those risks on others, if he determines that it will serve what he personally deems a worthy project or goal,” which contributes to his future dangerousness (p. 89).
For predictors: Looking at sentences where the loss was > $100MM and the method was Ponzi/misappropriation/embezzlement, there’s a 20-year, two 30-years, a bunch of 40-years, three 50-years, and three 100+-years (pp. 96-97).
Interesting item: The government has gotten about $3.45MM back from political orgs, and the estate has gotten back ~$280K (pp. 108-09). The proposed forfeiture order lists recipients, and seems to tell us which ones returned monies to the government (Proposed Forfeiture Order, pp. 24-43).
Life Pro Tip: If you are arrested by the feds, do not subsequently write things in Google Docs that you don’t want the feds to bring up at your sentencing. Jotting down the idea that “SBF died for our sins” as some sort of PR idea (p. 88; source here) is particularly ill-advised.
My Take: In Judge Kaplan’s shoes, I would probably sentence at the high end of the government’s proposed range. Where the actual loss will likely be several billion, and the loss would have been even greater under many circumstances, I don’t think a consequence of less than two decades’ actual time in prison would provide adequate general deterrence—even where the balance of other factors was significantly mitigating. That would imply a sentence of ~25 years after a prompt guilty plea. Backsolving, that gets us a sentence of ~35 years without credit for a guilty plea.
But the balance of other factors is aggravating, not mitigating. Stealing from lots of ordinary people is worse than stealing from sophisticated investors. Outright stealing by someone in a fiduciary role is worse than accounting fraud to manipulate stock prices. We also need to adjust upward for SBF’s post-arrest conduct, including trying to hide money from the bankruptcy process, multiple attempts at witness tampering, and perjury on the stand. Stacking those factors would probably take me over 50 years, but like the government I don’t think a likely-death-in-prison sentence is necessary here.
I’d look at pp. 5-12 of the linked sentencing memo for customers, pp. 15-18 for investors/lenders for the government’s statement of the offense conduct. The jury merely utters guilty / not guilty on each count, it does not provide detailed findings of fact. Judge Kaplan heard all the evidence as he presided at trial, and can rely on his own factual findings at sentencing under a more-likely-than-not standard. Of course, that is just a summary; Ellison alone testified for ~3 days.
Basically, SBF & FTX falsely represented that the customer assets were segregated from FTX’s own assets and would not be used by FTX. Yet Alameda regularly took large sums of money out of accounts holding FTX customer funds, and the “allow negative” feature allowed it to borrow ~unlimited money as well. This was not limited to funds made available to customers through the margin lending program.
At various points discussed on pp. 9-11, SBF directed Alameda to “borrow” more money from FTX despite knowing it was underwater at the time. For instance, at one point SBF directed Ellison “to use FTX customer funds to repay loans” (her words), despite knowing that Alameda was $11B in the hole and was already “borrowing” $13B in customer funds (p. 11). About $4.5B more in customer funds was used to pay Alameda’s lenders as a result (p. 11). In short, I don’t think the narrative presented in the linked post is backed up by the trial evidence.
Judge Kaplan heard all the evidence as he presided at trial, and can rely on his own factual findings at sentencing under a more-likely-than-not standard
The document is written by the prosecution though, right? Not the judge.
Or are you saying that, since the judge ended up more or less agreeing with the prosecution, we can just trust the prosecution’s arguments?
Yes, that’s in the quick take. It was still (and may still be), in my view, the best source reasonably available. The jury doesn’t say anything other than guilty / not guilty to each count—where a conviction could be based on multiple theories, it doesn’t even tell us which one the jury bought. The sentencing judge would make factual findings at sentencing (then a future event) but only as necessary to sentence. Anything written by the defense would almost certainly be inconsistent with the jury’s verdict, so that leaves the prosecution.
Given that the USAO is a long-term player, knows that Judge Kaplan presided over the trial and the pre-trial motions, and knows that SBF could file a reply, it’s very unlikely it would puff the facts to more than a moderate extent. Probably the trial transcripts provide a more authoritative resource, but are too long to recommend to much of anyone.
Cool, I fully acknowledge that this is my naivete, but for what it’s worth I assumed that “The government’s sentencing memorandum” was a memo explaining the judge’s sentencing decision, not what the prosecution was requesting the judge to decide.
Good to know! This may be one of those interpretations that becomes more plausible due to an intervening event. (The quick take was posted well before the judge decided the sentence.)
I can’t think of any circumstances like this in which “the government” would mean the court rather than the government-as-a-party-before-the-court. But that could only be obvious to me because of professional background.
Pretty much everyone in the system agrees that the Guidelines tend to be too harsh for economic offenses, especially as the loss amount (as computed under the Guidelines) becomes the main driver of the Guidelines figure.
As for the rest, I haven’t seen a transcript of Judge Kaplan’s sentencing remarks. The federal system gives very broad discretion to the sentencing judge (unless there is a mandatory minimum, which there wasn’t here). So while we can conclude that Judge Kaplan believed a 25-year sentence was “sufficient, but not greater than necessary” to achieve the purposes of sentencing, I don’t know why he believed that.
The government’s sentencing memorandum for SBF is here; it is seeking a sentence of 40-50 years.
As typical for DOJ in high-profile cases, it is well-written and well-done. I’m not just saying that because it makes many of the same points I identified in my earlier writeup of SBF’s memorandum. E.g., p. 8 (“doubling down” rather than walking away from the fraud); p. 43 (“paid in full” claim is highly misleading) [page cites to numbers at bottom of page, not to PDF page #].
EA-adjacent material: There’s a snarky reference to SBF’s charitable donations “(for which he still takes credit)” (p. 2) in the intro, and the expected hammering of SBF’s memo for taking credit for attempting to take credit for donations paid with customer money (p. 95). There’s a reference to SBF’s “idiosyncratic . . . beliefs around altruism, utilitarianism, and expected value” (pp. 88-89). This leads to the one surprise theme (for me): the need to incapacitate SBF from committing additional crimes (pp. 87, 90). Per the feds, “the defendant believed and appears still to believe that it is rational and necessary for him to take great risks including imposing those risks on others, if he determines that it will serve what he personally deems a worthy project or goal,” which contributes to his future dangerousness (p. 89).
For predictors: Looking at sentences where the loss was > $100MM and the method was Ponzi/misappropriation/embezzlement, there’s a 20-year, two 30-years, a bunch of 40-years, three 50-years, and three 100+-years (pp. 96-97).
Interesting item: The government has gotten about $3.45MM back from political orgs, and the estate has gotten back ~$280K (pp. 108-09). The proposed forfeiture order lists recipients, and seems to tell us which ones returned monies to the government (Proposed Forfeiture Order, pp. 24-43).
Life Pro Tip: If you are arrested by the feds, do not subsequently write things in Google Docs that you don’t want the feds to bring up at your sentencing. Jotting down the idea that “SBF died for our sins” as some sort of PR idea (p. 88; source here) is particularly ill-advised.
My Take: In Judge Kaplan’s shoes, I would probably sentence at the high end of the government’s proposed range. Where the actual loss will likely be several billion, and the loss would have been even greater under many circumstances, I don’t think a consequence of less than two decades’ actual time in prison would provide adequate general deterrence—even where the balance of other factors was significantly mitigating. That would imply a sentence of ~25 years after a prompt guilty plea. Backsolving, that gets us a sentence of ~35 years without credit for a guilty plea.
But the balance of other factors is aggravating, not mitigating. Stealing from lots of ordinary people is worse than stealing from sophisticated investors. Outright stealing by someone in a fiduciary role is worse than accounting fraud to manipulate stock prices. We also need to adjust upward for SBF’s post-arrest conduct, including trying to hide money from the bankruptcy process, multiple attempts at witness tampering, and perjury on the stand. Stacking those factors would probably take me over 50 years, but like the government I don’t think a likely-death-in-prison sentence is necessary here.
In case you know this off-hand or it’s easy for you to get or point me in the right direction, do you know how they established SBF’s intent to misuse the billions in customer funds? What I got from Googling this didn’t seem very convincing, but I didn’t read court documents directly. (See also https://forum.effectivealtruism.org/posts/ggkiDAZowmuzqZrnX/is-anyone-else-still-confused-about-what-exactly-happened-at )
I’d look at pp. 5-12 of the linked sentencing memo for customers, pp. 15-18 for investors/lenders for the government’s statement of the offense conduct. The jury merely utters guilty / not guilty on each count, it does not provide detailed findings of fact. Judge Kaplan heard all the evidence as he presided at trial, and can rely on his own factual findings at sentencing under a more-likely-than-not standard. Of course, that is just a summary; Ellison alone testified for ~3 days.
Basically, SBF & FTX falsely represented that the customer assets were segregated from FTX’s own assets and would not be used by FTX. Yet Alameda regularly took large sums of money out of accounts holding FTX customer funds, and the “allow negative” feature allowed it to borrow ~unlimited money as well. This was not limited to funds made available to customers through the margin lending program.
At various points discussed on pp. 9-11, SBF directed Alameda to “borrow” more money from FTX despite knowing it was underwater at the time. For instance, at one point SBF directed Ellison “to use FTX customer funds to repay loans” (her words), despite knowing that Alameda was $11B in the hole and was already “borrowing” $13B in customer funds (p. 11). About $4.5B more in customer funds was used to pay Alameda’s lenders as a result (p. 11). In short, I don’t think the narrative presented in the linked post is backed up by the trial evidence.
The document is written by the prosecution though, right? Not the judge.
Or are you saying that, since the judge ended up more or less agreeing with the prosecution, we can just trust the prosecution’s arguments?
Yes, that’s in the quick take. It was still (and may still be), in my view, the best source reasonably available. The jury doesn’t say anything other than guilty / not guilty to each count—where a conviction could be based on multiple theories, it doesn’t even tell us which one the jury bought. The sentencing judge would make factual findings at sentencing (then a future event) but only as necessary to sentence. Anything written by the defense would almost certainly be inconsistent with the jury’s verdict, so that leaves the prosecution.
Given that the USAO is a long-term player, knows that Judge Kaplan presided over the trial and the pre-trial motions, and knows that SBF could file a reply, it’s very unlikely it would puff the facts to more than a moderate extent. Probably the trial transcripts provide a more authoritative resource, but are too long to recommend to much of anyone.
Cool, I fully acknowledge that this is my naivete, but for what it’s worth I assumed that “The government’s sentencing memorandum” was a memo explaining the judge’s sentencing decision, not what the prosecution was requesting the judge to decide.
Good to know! This may be one of those interpretations that becomes more plausible due to an intervening event. (The quick take was posted well before the judge decided the sentence.)
I can’t think of any circumstances like this in which “the government” would mean the court rather than the government-as-a-party-before-the-court. But that could only be obvious to me because of professional background.
Why did SBF only get 25 years when the prosecution called for 40-50 (and the sentencing guidelines call for 110)?
Pretty much everyone in the system agrees that the Guidelines tend to be too harsh for economic offenses, especially as the loss amount (as computed under the Guidelines) becomes the main driver of the Guidelines figure.
As for the rest, I haven’t seen a transcript of Judge Kaplan’s sentencing remarks. The federal system gives very broad discretion to the sentencing judge (unless there is a mandatory minimum, which there wasn’t here). So while we can conclude that Judge Kaplan believed a 25-year sentence was “sufficient, but not greater than necessary” to achieve the purposes of sentencing, I don’t know why he believed that.